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Blockchain: a solution looking for a problem?

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Being conference season, there were many announcements in the past week about headlines companies wanted to gain with their innovations. One of the main headline grabbers for me came from R3. These included:


Before this, there was quite a lot of positive news for R3 around the world too, but the media no longer takes notice of this. Blockchain has moved from good to bad. The media thinks it’s tanked. It’s a former technology. Its promise is no longer there.

This particularly struck me in a Financial Times article from last week. The article is by Jemima Kelly, and is headlined:

Blockchain: disillusionment descends on financial services: Too many projects started with the technology rather than the solution

She’s realised the blockchain hype is fading. Something I was writing about six months ago, and have felt for over a year.

However, one quote really struck me in the article. It’s this paragraph:

“Blockchain’s failed promises could be a mandatory class in business school for how not to build a sustainable organisation,” says Tim Swanson, head of market intelligence at blockchain company Clearmatics. He adds that, in most cases, entrepreneurs have just recast the same market, but with their technology the centre.

Now, if you don’t know Tim, he was former head of market research at R3, and a bull on blockchain. He still is but clearly, like me, Jemima and everyone else, is disappointed with the pace of blockchain developments.

The fact is that blockchain has been a solution looking for a problem. It found the problem – centralised databases that needed a lot of human management to maintain – and offered the solution – autonomous databases that are decentralised and managed by the network. However, the problems it addresses, and its strongest use cases are in areas that cannot be addressed by technology. It needs to be addressed by humans.

For example, one strong use case is digital identity. However, digital identity is a really hard nut to crack and requires lots of standards and agreements between governments, financial markets, businesses and administrations before it can be sorted out.

Another strong use case is in clearing and settlement. But clearing and settlement requires agreements between central banks, exchanges, custodians, counterparties and central clearing authorities before technology can be applied.

That’s why Blythe Masters moved on from Digital Asset Holdings, and why 30 that blockchain is struggling to get past the experimentation phase. It’s just not ready for prime time yet.

However, for those who might read this and think that I’m striking a negative note, I’m not. I still totally believe that blockchain, decentralised ledgers or whatever you want to call them, will revolutionise everything … it’s just complicated and, as noted, is related to use cases that have nothing to do with the technology but agreements about how to apply the technology. Those agreements are taking a long time, but they will come. One day.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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